ArkleyWatch.com

Thursday, August 31, 2006

Local business owners Rob and Cherie Arkley and two of their companies, Race Investments and Security National Servicing Corporation, are facing $38,500 in administrative penalties from the Fair Political Practices Commission for multiple violations of the Political Reform Act related to campaign contribution disclosures.

The contributions in question date back to 2002, 2004 and 2005, years in which the four made donations to candidates or committees that totaled $50,000 or more.

Under the Political Reform Act, donations of $10,000 or more in any given year bump the contributor into a “major donor” category, which requires semi-annual statements be filed with the secretary of state. In the $50,000 or more accumulated contribution range, a corresponding online or electronic statement also must be filed.

The FPPC report on the case lists 11 violation counts, including failures to disclose late contributions and to file the semi-annual campaign statements by the appropriate due dates, as well as failure to disclose an affiliated entity and its contribution — a point related to Security National’s $250,000 donation to the Citizens to Save California (Yes on Props. 74 and 76) campaign in 2005.

John Piland, a certified public accountant with Security National, explained Wednesday that the problem had been largely organizational in nature.

“The issue originally was that political contributions were being made by a variety of Security National entities,” he said. “So now we have a better system for keeping track of those things.”

The semi-annual statement violations encompassed 17 separate donations, the largest of which were $250,000 each to the Citizens to Save California campaign and the 2004 Governor Schwarzenegger’s California Recovery Team; $100,000 each to the Republican Party Central Committee of Los Angeles County in 2004 and the Coalition for Employee Rights (Yes on Prop. 75) in 2005; and $80,000 to the California Republican Party in 2004.

Late contributions included a $12,000 donation to the Friends of Paul Gallegos campaign in 2004, $5,000 to McClintock for Lt. Governor in 2006 and $100,000 to Stop the Reiner Initiative (No on Prop. 82) in 2006.

According to the FPPC report, the relatively large amount of unreported late contributions and a previous enforcement action in 2002 factored into the $38,500 administrative penalty — as did the mitigating effect of the group’s efforts to make amends through providing the necessary paperwork and initiating a “proactive compliance program,” including hiring a professional campaign treasurer and counsel.

“There is no evidence that the failure to timely file the campaign statements was intentional or deliberate,” the FPPC report stated. “In addition, Respondent Committee cooperated fully with the Enforcement Division’s investigation in this matter.”

The maximum administrative penalty for the 11 counts was $55,000.

Jon Matthews, a spokesperson for the FPPC, emphasized that the fine was strictly administrative in nature, not civil or criminal.

The stipulation agreement reached between the FPPC and the Arkleys and their companies acknowledges the violations and accepts the penalty, a cashier’s check for which amount has already been submitted, Piland said.

The issue will be reviewed by the five-member commission board on Sept. 12, a hearing Piland classified as essentially a “rubber stamp” approval of the stipulation.

“Most of our cases are resolved by stipulation,” Matthews acknowledged. “However, this case does not become final until the commission acts on it.”

Sunday, August 13, 2006

"Arkley, by contrast, is less a big fish in a big pond than a whale in a small and murky one, winning kudos and condemnation with seemingly every splash he makes. His actions have even inspired a monitoring blog, arkleywatch.com."

What happens when two daily newspapers duke it out in a market known more for its weed than its writing?

by Joel DavisSan Francisco ChronicleSunday, August 13, 2006

"...where daily life straddles the line between unprecedented innovation and total chaos."

-- From a SCI FI Channel promo of "Eureka"

It is the unlikeliest retail war in the unlikeliest market, a high-stakes game of chicken in a place so offbeat, it is now the setting for a new Sci-Fi Channel show.

But lift the Redwood Curtain and that's what you'll find in Eureka, the county seat of scenic Humboldt County. The Humboldt Nation, as locals who have little use for the rest of the world call it, is a remote region dotted with distinct towns and communities, miniature red and blue states where blackberries are still thought of as fruit, where ink-on-paper newspapers still out-Why Wi-Fi.

Humboldt's scattered population of some 130,000 -- about equal to Hayward or Concord -- has up to 10 weekly newspapers, which range from meaty and slick to shakily slapped-together advocacy sheets that you can, as the old saying goes, "throw in the air and read before they hit the ground."

But the real action is in Eureka. Eureka, population 27,000, is ground zero for a rambunctious newspaper battle between two dailies in a town that seems barely able to support one newspaper, let alone two.

In one corner sits the 20,000-plus paid-circulation Times-Standard, managed by Dean Singleton's tight-fisted, Denver-based MediaNews Group, a paper with an up-and-down past, a newspaper as old as a redwood. Its employees toil in a windowless newsroom (some call it the "news tomb") on aging equipment over scruffy carpet, the staffers communicating above the crackle of a police scanner. Around the corner, down the street and through the seemingly omnipresent mist, is the upstart "fair and balanced," family-owned Eureka Reporter in pristine digs, windows included. Still unscathed by the daily pounding inflicted by news staffers on deadline, it looks like a bank. This is not a stretch, as the Reporter is owned by brash financier/tax attorney Robin P. Arkley II, head of Security National Holding Co., a Eureka-based multibillion dollar national real estate development and loan acquisitions company with offices in the United States and Europe.

It's a pound-the-pavement tussle between two dailies that are constantly trying to scoop each other, something rarely found in big cities anymore, let alone towns with populations under 30,000.

"It's amazingly cutthroat," observes Kevin Hoover, the irreverent publisher/editor/owner of the weekly Arcata Eye, the beat-poetic paper in the university town 7 miles and a world away from Eureka. "If you spend any time with either crew, even if it is at a news site, they will talk s -- about each other."

Adds Hank Sims, editor of the North Coast Journal, the closest thing the region has to an alternative weekly: "It's like the Wild West out here. We've got not only two daily papers now, but every little small town has its own community weekly. It's an intelligent area, and people like to read. For a newspaper person, it is fantastic."

Wild West is an apt description of Eureka, which has long had an anachronistic, Barbary Coast feel. And the city's newspaper war, which flies in the face of an industry that is contracting and consolidating at a frightening clip, reflects that. It's like a cosmic collision where retail gods with a twisted sense of humor decided to pair an economically distressed newspaper industry with an economically distressed city, in a Darwinian race for readers and advertisers. Reporter owner Arkley, 50, is a sugar daddy in a town that needed one. Although stunningly beautiful in spots -- to the point that retirees fleeing urban areas have put housing costs out of reach for most natives -- Eureka has in many ways eroded into a town that few would argue needs revitalization as its now-heavily regulated lifeblood industries -- timber and commercial fishing -- circle the drain.

Tourism never really caught fire, it's too far, too cold. The Redwood National Park about 50 miles north of Eureka, which was projected to be the next Yosemite when it opened in 1968, is instead a soggy "park, pee, stretch" stop that attracts few overnighters. The occasional movie or TV commercial is shot in Humboldt's cathedral of redwoods, but not often. Even "Eureka," the television show that debuted this summer, is being shot in more prosperous Vancouver, Canada.

But Arkley remains. A lifelong local whose roots reach back to the 1800s, Arkley has done everything from dramatically sprucing up Eureka's aging zoo to revitalizing its scruffy waterfront and Old Town areas to building a long-coveted performing arts facility bearing his surname. He also added the downtown area's first Starbucks, a ubiquitous, somewhat resented addition (though nearby Times-Standard staffers aren't above sneaking in now and then for a fix) that is hard to miss on the most visible stretch of the Highway 101/Fifth Street thoroughfare that cuts through town. Arkley's Fifth Street Plaza, conveniently located across the street from the nondescript Security National building, where Arkley's vast real estate development/holding operation is based, is perhaps the most visible symbol of what detractors believe is Arkley and his cronies' overdevelopment zeal. It includes a fancy townhouse for visitors and VIPs.

Arkley also hopes to reel in a Home Depot, perhaps some other chain businesses and what he says would be affordable housing to an abandoned rail yard on the outskirts of town, a creepy mishmash of rusty boxcars and train tracks where the ocean breeze is overwhelmed by emissions from a nearby pulp mill and a fish-processing plant. The controversial project, called the Balloon Track, has yet to lift off, though it appears anything done to the site will be an improvement.

An outspoken doer who revels in running through, over and around bureaucratic red tape, Arkley uses his deep pockets, iron will and considerable business acumen and contacts to get things done. He is a big-time contributor to Republican coffers across the nation, and is known to name-drop ("I could get Arnold Schwarzenegger up here with one phone call," he was quoted as saying at the opening of the Fifth Street Plaza, albeit in the pages of the rival Times-Standard).

Ah, the Times-Standard. Arkley claims not to have picked it up in five years ("I don't read it, but understand it to be quite liberal"), but nevertheless seems to be an expert at picking at its weaknesses while picking its pockets. And it is working to some extent: Times-Standard staffers, while counterpunching with award-winning journalism observers say is its most relevant in memory (John Driscoll, the paper's natural resources and industry writer, won first place from the California Newspaper Publishers Association for his April 24, 2005, story "Aleutian solutions," about a recovered population of Aleutian geese, and last year, Driscoll won a second-place award from CNPA for his 2004 series "Endless seasons," which profiled ranching life on the North Coast.), appear rattled.

Though it is unlikely Eureka will ever be known as Arkleyville, Arkley, son of an area timber scion, is definitely leaving his mark.

"He's a bull in a china shop -- and it's his china shop," says J Warren Hockaday, executive director of the Greater Eureka Chamber of Commerce, whose members include Arkley and Times-Standard Publisher David Lippman. "Rob is a very intelligent and eccentric guy who is in a position to do the things he feels he needs to get done. ... He doesn't necessarily need to go through a public participation to get things done."

So far, local media observers say, Arkley has kept his notoriously conservative views out of his paper.

The Reporter is nevertheless a publication many believed was launched to put the 152-year-old Times-Standard out of business. The Times-Standard, right-leaning when I worked there as an entertainment and news editor from 1988 to 1995, is seen as tilting left now. And it seemingly incurred Arkley's considerable wrath when it failed to endorse his wife Cherie's failed bid for Eureka mayor in 2002, a race Cherie Arkley lost by fewer than 50 votes. Arkley maintains the lack of an endorsement that likely would have put his wife's candidacy over the top "had nothing to do with" starting the rival newspaper. "That's foolishness," he says.

The American flag on the masthead is so far, along with the "fair and balanced" motto lifted from Fox News, the only obvious Arkley-ism found in the Reporter. (All U.S. newspaper mastheads, Arkley reasons, "ought to have a flag and thank God above they have freedom of the press.")

Flag or no flag, the Eureka Reporter is a handsome paper distributed to more than 20,000 homes at no charge, or as its masthead boasts, the paper is "Priceless." It is following a growing, albeit more urban trend of free-circulation dailies that eschew subscription and rack sales to entice a generation of readers who are used to free downloads of everything from news to music to movies.

At the forefront of the "freebie" trend is yet another Denver publisher, Philip Anschutz, a billionaire who is targeting upscale readers with free delivery and newsrack offerings of the San Francisco, Washington and Baltimore Examiners. The thinking is that whatever is lost in paid circulation could be made up for in advertising delivered with a wider net, especially when upscale readers are targeted.

"I think it is the model," Arkley says.

Counters Singleton: "No free daily in America has ever made a profit."

The Reporter is a paper so new that its staff could still use nametags. News-siders range from eager Humboldt State University journalism grads to veteran scribes lured by better, well, everything. And the trash talk doesn't end with reporters cutting each other for stories, including a fight that broke out between news staffers from each paper at the scene of a fatal accident.

Singleton, head of Times-Standard parent MediaNews Group, one of the largest and most controversial newspaper chains in the country, is unimpressed. He is a very big fish in a big national pond who is not afraid to criticize a paper that is treating his Times-Standard like a piñata, whacking away at its circulation, ad revenue, staff and, perhaps most critically, print jobs, which the Reporter is gobbling up thanks to its sparkling press and a crack crew of pressmen.

Arkley, by contrast, is less a big fish in a big pond than a whale in a small and murky one, winning kudos and condemnation with seemingly every splash he makes. His actions have even inspired a monitoring blog, arkleywatch.com.

His Eureka Reporter has morphed from an online publication that started in August 2004 that the Times-Standard shrugged off to a printed thrice-weekly paper in April 2005, to what the Reporter has been since January: A widely circulated free daily with razor-sharp graphics printed on a multimillion dollar press that is forcing the highly profitable Times-Standard to do something it really hasn't had to do since the Humboldt Times and Humboldt Standard officially merged in 1967 (though the paperswere under the same owner since 1941): compete -- and compete hard.

"I get tired of the Times-Standard saying 'Rob is trying to put us out of business,' " Arkley says. "I mean (the Times-Standard and parent MediaNews) are a monopoly in every market they are in, whining like a bunch of babies. ... The first lick of competition they get they scream like they are getting (screwed). ... They are not having any fun."

Though he doesn't mince words or political views, Arkley is something of a contradiction. While claiming not to have read the rival paper in five years, he seems to know an awful lot about it. He torments Times-Standard Managing Editor Charles Winkler with snarky e-mails that he often cc's to Singleton. His Eureka home is fairly modest, a contrast to the lavish touches on commercial buildings he's installed or renovated around town. He says he doesn't like fielding questions from journalists, yet now employs them. His hobbies range from macho (hunting and fishing) to dainty (picking berries). He is a family man who dotes on his wife and two daughters but who, when interviewed for this story, anyway, often raised his voice while cussing a blue streak, making emphatic points with F-bombs. He grew up in the ultimate a hippie college town -- nuclear-free, Green Party-dominant Arcata -- in a hippie era, yet his political will is firmly to the right of George Will. He allows liberal columnists and opinions on the editorial pages. His publisher at the Reporter is a woman in a position traditionally occupied by men. Judi Pollace is a highly regarded newspaperwoman who has worked at both the Times-Standard and for Singleton. Pollace seems a smart hire for her work ethic alone. (I worked with her, at the Times-Standard when Pollace was advertising manager. She was often first to arrive and last to leave.)

Arkley disdains unions, yet is known for generous salaries and generous benefits, including paying up to $10,000 college tuition for employees and their family members to earn degrees provided they maintain a "B" average. He says he tried to buy the Times-Standard ("I was told it was not for sale").

Singleton has no recollection of any Arkley overtures. "I don't remember having been approached by him, and nobody can deal with buying and selling newspapers in this company except for me," Singleton notes. "And it would do no good because the Times-Standard is not for sale."

With the Times-Standard one of the few things in town off-limits to him, Arkley says he launched the Reporter out of a desire for more local news.

"I noticed over the generations the Times-Standard went from being the Times-Standard to the 'Sub-Standard' to the 'Daily Disappointment,' " Arkley says. "It was not publishing local news. ... Part of the challenge for local communities today is to keep our local identities. And one of the easiest and most direct ways is to do that is with our local newspapers. I felt we needed a local paper again."

Times-Standard news staffers call the Reporter the "Eureka Distorter" and find its "Priceless" label on the masthead arrogant and a little too precious.

But they seemed genuinely concerned about the upstart, and with good reason: The daily Reporter has a bigger editorial staff, a better printing press, newer equipment and several experienced local journalists, including some former Times-Standard journalists, namely most of its former sports staff.

"Folks at the Times-Standard have indicated to me they are pretty nervous," about the rapid progress of the Reporter, Hoover of the Arcata Eye notes. Although the Eye has lost about 40 percent of its staff to the Reporter, Hoover, whose police report haikus have legions of fans and have even spawned a book, says his readership and advertising have remained stable.

But he and others believe the Times-Standard defections have hurt the Times-Standard. Says reporter Mike Morrow, who jumped from the "T-S" to the new paper:

"It's more money, better benefits, better gas mileage. The equipment is first-rate -- they even gave me a laptop and a cell phone off the bat."

Despite his considerable experience, Morrow, whose Reporter salary is about $35,000, said he was making less than $25,000 when he left the Times-Standard. "The Times-Standard made a counter-offer, but it was basically an insult. ... A manager at McDonald's made more than I did," he said.

Morrow, 60, is a longtime newspaperman who believes Arkley is in it for the long haul, and has managed to keep his conservative views out of the paper. "The paper is as independent of its owner as it can be," he says, echoing a sentiment expressed by others. "So far," agrees Arcata Eye Publisher Hoover, "Rob has taken the high road on this thing."

While he has plenty of admirers, Arkley has, as outspoken, aggressive developers tend to have, many detractors. And several seem reluctant to publicly criticize him.

"None of us trust Arkley, and that is why I do not want to go on the record," said a Humboldt State journalism instructor.

Singleton is happy to. A cost-conscious newspaper wrangler whose resources and bravado are a worthy match for Arkley's, Singleton seems to view Arkley and his upstart daily as little more than a minor nuisance. Singleton is fresh from a colossal, billion-dollar deal in which he landed the San Jose Mercury News and the Contra Costa Times and other papers from the McClatchy Co. In the complicated transaction, the Hearst Corp., which owns the San Francisco Chronicle, is buying the Monterey County Herald and St. Paul (Minn.) Pioneer Press and then transferring the papers to MediaNews. In exchange, Hearst gets an ownership stake in MediaNews' newspapers outside the Bay Area.

But if Singleton is worried about the Eureka Reporter, he isn't showing it.

And while Arkley claims to no longer read the Times-Standard, Singleton reads the Reporter, which he derisively calls a "shopper" because it is a free newspaper that he says gets delivered to homes willy-nilly whether they want it or not.

"I watch (The Reporter) carefully," Singleton says in his Rocky Mountain twang. "And they have done some good design things. But when you get right down to it, it is not really a quality newspaper. ... I think it makes (Arkley) think he is a big man in town. I am not sure buying a printing press and throwing papers around makes you a big man in town, but he thinks it does."

Arkley, Singleton adds, "doesn't sell newspapers. He just puts them out for free. Nobody's expressed whether they want it or not. They wake up, and there it is."

Observers closer to the battle lines are more complimentary. Sims of the North Coast Journal, one of the publications now printed on Arkley's fancy press -- says Arkley no longer returns his phone calls because of things Sims has written about him. But he admires aspects of the Reporter.

"The design and layout are clean. It's unbelievable. It's printed on nice, thick paper like I've never seen."

Sims says that while Arkley's public contributions to the city are akin to "a bit of a renaissance," he can be his own worst enemy.

"The thing that turns him off to people is he has very, very strong political beliefs. And he gets very frustrated and personal when he is crossed."

Reporter Publisher Pollace has nothing but praise for Arkley. A willowy, well-coifed blonde with a cackling laugh, Pollace is a former publisher for smaller papers, including MediaNews papers in Lake County. She says working with Arkley's generous budget has made her the envy of other publishers at newspaper confabs. At the other papers, she says, "I never had a copy editor, never had more than three reporters; and every time there was a budget crunch, I would lose one of those."

She adds that Arkley's editorial input has been minimal, that he rarely sets foot in the Reporter building.

"When we started this paper," she says, "everyone expected to see a very conservative paper. In fact, one of our editorials came out in support of gay marriage, and there were some people stunned we would do that."

When asked whether the Reporter would cover the story if, say, Arkley's Security National was indicted for something, Arkley responds, "Of course. It's news ... my vision is one of objectivism."

While Pollace credits the Times-Standard for doing some things right ("they are spanking us on local editorials"), she contends that the Reporter is superior in local coverage and a better buy for advertisers, while keeping the Times-Standard's rates in check. She says circulation is about 25,000 already and expects it to top out at about 35,000. She maintains that her paper would not be necessary if not for what she called "the biased reporting of the other daily."

Whether either paper is biased is open to interpretation. Singleton's thrifty reputation is not, though his purchase of the Times-Standard in 1996 from the notoriously tight Thomson Corp. may be one of the few times where a Singleton buy was an upgrade: When I toiled at the Thomson-owned Times-Standard, expenses were so tightly monitored that staff had to go through accounting to get a pencil or notepad out of the company vault.

"I can assure you nobody has to beg to get a pencil out of the safe anymore," says Lippman, Times-Standard publisher since July 2005. "The wages we pay are pretty in line with national averages for papers this size. That said, we certainly try to run in a businesslike manner, which includes making some money."

Little if any of that money stays in Humboldt County, Arkley says. "All (MediaNews) has done is take money out of the community both through the profits and the advertising rates that have gone up and up and up."

Singleton says that the Times-Standard "does very well" and that its profits go into "reinvesting in the company." He said the paper has responded to the Reporter by adding "a lot of news hole and some staffing and budget."

While management of both papers say they are in it for the long haul, neutral observers think Eureka, where pawn shops still outnumber Starbucks, can support two papers for only so long. And while the effect so far has led to better journalism, better rates for advertisers and more choices for readers, the honeymoon may not, given the economics of newspapering, let alone the economics of Eureka, last long.

"I think it all depends on how hard Dean Singleton wants to fight," Sims of the North Coast Journal says. "I don't think Arkley will cut his losses and get out."

Hoover of the Arcata Eye paints a more draconian picture, one where the only daily keeping an eye on Arkley's development activities is the one owned by ... Arkley.

"If the Eureka Reporter were to drive the Times-Standard out of business, then what? Would Rob say, 'All right, it is free and clear, and I don't have to offer diverse opinions?' "

Time will tell. Or as the SCI FI Channel itself would say about "Eureka," stay tuned. ...

Joel Davis is a Sacramento journalist and college journalism instructor. His work has appeared in the Sacramento Business Journal, the Sacramento News & Review, Sacramento Magazine, Comstocks Magazine and Editor & Publisher. He is the author of "Justice Waits: The UC Davis Sweetheart Murders" (Callister Press).